Lincoln Unit Trust Managers has moved to quell investor sub-prime related fears, saying the hype may be "overdone".
Stuart Tyler, Lincoln’s senior investment analyst, says a recent Deutsche Bank study indicates US house prices would need to fall by 25% per annum over the next two years to justify the price falls seen in sub-prime debt linked bonds.
“While there will be some economic slowdown in the US, the housing market is unlikely to suffer as much as the bond markets expect,” he says.
“April will be pivotal, because this will be when many of the low fixed rate deals associated with sub-prime mortgages expire.
“The impact of that on house prices and the wider economy will be interesting.”
The firm says its funds are currently positioned for an expected global slowdown, with more defensive value-driven stocks.
In the UK, Lincoln’s Growth and Opportunities funds, run by Goldman Sachs Asset Management, are focusing on companies which can achieve sustainable growth.
The firm also has no plans to abandon Japan, saying the country offers “some of the cheapest stocks in the developed world”.
“It has managed to avoid much of the fallout from the sub-prime issues in the United States and it has not exhibited the same bubble symptoms present in many other markets,” Tyler says.
“As China’s economy continues to grow at a rapid rate, there are many world-class companies in Japan that are well positioned to assist in that development.”
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